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City Health Insurance Increase Reduced To 14%

OCEAN CITY — Even though
the town of Ocean City negotiated rising health care costs to half of what it
could have been, the bottom line is that the town will pay almost $1 million
more to provide health insurance for its workforce in fiscal year 2011.

One of the most
cumbersome statistics that was a proverbial thorn in the side of City Manager
Dennis Dare and Budget Manager Jennie Knapp as they prepared the budget was the
proposed 30-percent increase in the town’s health care premiums with their
provider Care First.

Dare told the council
during the final budget wrap up hearings that he had negotiated the increase
down to 20 percent, which is what Knapp budgeted for several weeks ago.

However, it was revealed
this week, that the town got a sweeter deal and the rise in health care costs
will be 14.3%, or less than half of what was originally proposed a few months
back.

Although one might
assume that the town would accrue even more savings, Knapp said this week that
she had received word that the final numbers were leaning towards 14.3% rather
than the 20% the town had announced, and had already applied that additional
savings to the tax rate.

“The health care
negotiation was a big reason that we were able to lower the proposed tax rate a
penny to 39.5 cents (per $100 assessed valuation)”, said Knapp. “As a result of
the negotiations, I was able to apply $235,760 to the tax rate and moved
additional savings to other departments and funds.”

Knapp said additional
money went into the water and wastewater funds, which will help keep consumer
rates at similar levels, and it will also help the Eagles’ Landing Golf Course
“break even”, she said.

Depending on
perspective, the town’s negotiation of health care costs is a double edged
sword, because despite the fact that it was less than it could have been, the
town is inevitably going to be paying substantially more to cover its employees
than it did last year.

“So, even with the best
and final numbers, the end result is that healthcare is going to cost us an
additional million bucks this year,” said Councilman Jim Hall.

In essence, the deal was
set with the caveat that the town will offer a dual option PPO or HMO for its
employees and to implement some sort of strategy that would offer a lower HMO
for new hires.

Councilwoman Margaret
Pillas said that Tuesday’s presentation showed that her quest to address salary
structure and employee benefits has not been in vain or out of line.

“I’ve been fighting to
bring this topic to the forefront for the last four years, and it solidified
what I already believed, and that is we should really look into restructuring
our benefits packages and salaries for new hires, and I think we have a real
opportunity to finally address this,” Pillas said.

Knapp noted the city is
not alone with these increased benefits.

“Health care costs are
going up everywhere, not just here, and if you look at what we ended up with,
which is a little less than half what was originally proposed, we could have
been spending $2 million more and not just $1 million,” she said.

Knapp also said that the
town would not be covering the 89 employees who are no longer working for the
town this year, either due to retirement or restructuring, and that the sum of
that change must be figured into the debate as well.

When the 20-month hiring
freeze is eventually lifted, some members of the council are outspokenly hoping
that a new system for pay and benefits is well established and set in stone.

“It’s something we need
to move on now, so we can save ourselves a lot of money in the long run and
truly right-size our government,” said Pillas.